* Bank pays price for indiscretions with bond mandate loss
* Three banks initially mandated, but only two run deal
By Philip Wright
LONDON, July 11 (IFR) - Barclays on Wednesday was dropped
from a major Japanese bond deal, in what looks to be the first
time it has lost business since admitting its role in the Libor
The Japan Bank for International Cooperation (JBIC), which
included Barclays among three banks assisting in the deal when
it was announced in May, left them out of the final offering.
"Barclays was dropped because of reasons related to
reputational and counterparty risk issues," said one banker with
knowledge of the process.
"I haven't seen any other specific examples yet of it
impacting them, but clients are more sensitive to this stuff
now," said the banker. "It's not an easy time for them."
Barclays confirmed it had been left off of the deal, which
sources in the market said could reach US$1 billion in bond
sales -- large enough to earn a hefty sum in fees.
The five-year bond, which is expected to price later on
Wednesday, is now being handled by Bank of America Merrill Lynch
and HSBC alone.
"We cannot comment about anything, because from our side we
have not made anything public about the deal," a JBIC official
A source with knowledge of the transaction called the move a
"unique situation" and downplayed suggestions that Barclays may
end up being shut out of business in Japan and elsewhere.
Barclays took part in two other bond deals for Japanese
borrowers, Sumitomo Mitsui Banking Corp and NTT, this week.
But there is a long tradition in Japanese business of doing
everything possible to avoid public scandal, particularly at
those institutions, such as JBIC, that are government-related.
The Japan Housing Finance Agency, another government-related
entity, on Monday dropped Nomura -- under investigation for
insider-trading offences -- from two transactions.
Barclays was fined more than $450 million for manipulating
Libor, an interbank interest rate that underpins hundreds of
trillions of dollars in transactions around the world.
Chief executive Bob Diamond resigned last week over the
scandal, which claimed the scalps of other Barclays executives
and has led to an onslaught of negative media attention.
An official at a Japanese bank on Wednesday declined to
comment on the decision to cut Barclays from the JBIC
"Whether this is connected to the recent press stories about
that firm," the official said, "I leave you to speculate upon."